PURSUANT TO STANDING ORDER 4AA, HIS EXCELLENCY THE GOVERNOR, THE RIGHT HONOURABLE CHRISTOPHER FRANCIS PATTEN, ATTENDED TO ADDRESS THE COUNCIL AND TO RECEIVE QUESTIONS.

PRESIDENT: Members please remain standing for the Governor.

CLERK: His Excellency the Governor.

PRESIDENT: The Governor will address the Council on his visit to Canada and the United States and take questions on this and two other topics, namely, the fight against drugs and sewage charges.

GOVERNOR: Mr President, I should like to brief the Council on my official visit to Canada from 30 April to 3 May and to the United States from 3 to 10 May.

In Canada, I met the Prime Minister, the Minister of Foreign Affairs, the Minister of Citizenship and Immigration, the Minister for International Trade, the Secretary of State for Asia Pacific and other political figures. I addressed a number of large gatherings, including a lunch for about 1 200 people in Vancouver and a gala dinner for over 500 in Toronto.

My main purpose in Canada was to promote the case for visa-free access for Special Administrative Region passport holders. I am glad to say that the Canadian Government accepted this case in principle, though they made it clear that there were a number of detailed points which they wanted to have sorted out before they could reach a final view. These related principally to returnability, where we are in the process of providing reassurances to the Canadian Government, and to the question of right of abode, where we hope that expert talks with Chinese officials will provide the clarifications which Canada, together with other countries and the community here in Hong Kong, are seeking.

In the United States, I addressed large meetings in New York and then I went on to Washington where I made speeches to the National Press Club and the Heritage Foundation and had meetings with senior members of the United States Administration. I met the President, the Vice-President, the Secretary of State, the Secretary for the Treasury, the Secretary of Commerce, the Chairman of the National Security Council, the Chairman of the Economic Council, and other senior officials. On Capitol Hill, I had discussions with Senator DOLE and the leadership of the Republican Party in the Senate; Senator DASCHLE, the Democratic Leader in the Senate; the majority leadership in the House of Representatives; the Senate Foreign Relations Committee; the House International Relations Committee; the House Ways and Means Committee; and many other Congressmen.

My main purpose in America was to lobby for the unconditional renewal of the Most Favoured Nation (MFN) trading status for China, not putting China's arguments, but making the case for Hong Kong. I think it is fair and accurate to say that as a result of my visit, the visit a week or so earlier by Mr Martin LEE and Dr YEUNG Sum and the visit on which the Chief Secretary has just embarked, the United States will be taking very careful note of Hong Kong's concerns and interests in any decision that is made on MFN. In particular, they will be acutely aware that Hong Kong's transition is at a very sensitive phase and that anything which damaged the economy, which a failure to renew MFN would do, would make a successful transition that much more difficult to achieve.

There was, understandably, huge interest in both Canada and the United States in the progress of the transition and in the prospects for Hong Kong's future. There was both a groundswell of goodwill towards Hong Kong, willing it to succeed; and at the same time growing expressions of scepticism about whether it would be able to do so. At meeting after meeting, I was pressed with questions about actions which had been taken by China and by the Preparatory Committee or by statements which had been made by them ─questions about the future of democratic institutions in Hong Kong, the future of the Civil Service, the future of the rule of law, and the future of the Bill of Rights. Would all these survive? Would they be damaged? Given China's actions, on what basis could I be sanguine about the future, I was asked.

In response, I expressed my belief that the economy of Hong Kong would remain robust and would continue to grow; that Hong Kong people would continue to show the entrepreneurial skills and determination that had helped to make the territory the economic wonder that it had become; and that these same people would also demonstrate their determination to stand up for their autonomy after 1997, for the rule of law and for the freedoms they had been promised in the Joint Declaration.

I hope I was able to give some reassurance to the people who pressed me with their concerns and doubts. Many of them were businessmen, whose support and confidence Hong Kong will need in the future. Others were simply people who shared with Hong Kong a belief in the same values and civic freedoms and whose ardent hope was that these values and freedoms will remain and prosper here in the future. We cannot let their confidence falter. I hope that China and China's advisers will recognize the fragility of that confidence and seek to bolster it wherever possible through words and actions which underline their commitment to the Joint Declaration and everything it says. For our part, we in Hong Kong must continue to address the concerns of our friends overseas honestly and directly, and make clear that we are committed, fully and wholeheartedly, to Hong Kong's future autonomy and to the continuation of its way of life. I am sure that is something on which all of us here can agree.

PRESIDENT: Members may now put questions on the three topics. I would like to remind Members that a Member who has asked a question may, for the purpose of seeking elucidation only, ask a short follow-up question. A show of hands please. Mr Henry TANG.

MR HENRY TANG (in Cantonese): Mr Governor, both the restaurant and catering services as well as the business sector have been in support of the importance of environmental protection. We are also in support of the "polluter pays" principle, that is why we agree to the payment of charges for sewage treatment for the purpose of water quality improvement. However, of the total amount of sewage charges and trade effluent surcharges received, 40% is paid by restaurants. As for trade effluent surcharges alone, restaurants have paid as much as 75% of the total amount. The Commissioner for Administrative Complaints has also admitted that the Government's method of calculation is erroneous. Mr Governor, whilst the Government puts forth the "polluter pays" principle, it cannot offer any evidence to show that the proportion of pollution produced by restaurants constitutes 75% of the total amount of pollution of the territory, do you think this is against the spirit of the "polluter pays" principle?

GOVERNOR: I must be careful how I reply because as the honourable gentleman may be aware, some of my best friends are restaurants!

I am delighted that the Honourable gentleman has asserted once again his belief in the "polluter pays" principle and this Council has done the same on numerous occasions. In my experience, and I speak as a former Secretary of State for the Environment in Britain, it is not only in Hong Kong where people are happy to sign up to the "polluter pays" principle in principle, but are sometimes a little less enthusiastic about it in practice. We all think that it is the next person who is the polluter and that our own habit is wonderfully benign.

But, of course, the Honourable Member raises an issue which is of concern to the business sector and, I daresay, to those who visit restaurants, particularly those who visit restaurants frequently and inevitably see the charges which restaurants have to pay whether for electricity or telephones or sewage reflected in their bills at the end of the meals they consume. Because there has been an argument about Trade Effluent Surcharge (TES), about the total bill which is paid by restaurants, about their share of the cost of dealing with pollution and about the extent to which they were consulted when the TES was brought in, we have agreed to get on with our review of the TES, an independent survey the conclusions of which we will want to share with the Council and with the community so that we can modify the TES if that is required. We have no interest whatsoever in sticking to a form of charge which may be scientifically flawed or unfair. We have to get things right and as soon as the survey is completed and properly and thoroughly done, we will want to share our conclusions with this Council and with the industry.

But can I just make a couple of other points, and I make them just so that we can keep these arguments in perspective. I think that the extra costs which restaurants would have to bear during the coming year represent somewhere between 0.1% and 0.2% of their overall costs and I very much doubt whether an increase of that proportion is going to topple a business from profit into insolvency. The costs are not, I think, as great as some of the others which the restaurant trade has to bear.

Secondly, of course, one of the things that one hopes will follow from the "polluter pays" principle is the introduction by individuals and by commercial interests of the technology or the practices which will limit the amount of pollution which they themselves produce. It is clearly easier to see then done when you are talking about a large firm or a large manufacturing plant, but there are also things which smaller polluters can do to limit the pollution and to limit the charge on them.

MR HENRY TANG (in Cantonese): Mr President, I have a very short supplementary. I had been a member of the Labour Advisory Board for nine years and I know very well that the Government is very good at using statistics to help selling its point. That is to say, if it wants us to accept an idea, it will manipulate statistics in such a way that it appears to us to be inexpensive and very acceptable. I hope that the Governor can be more careful with figures in noting the 0.1 or 0.2 increase in costs. Will the Governor inform us by what time will the study that he has mentioned be completed?

GOVERNOR: It will be completed later this year. As for the question of statistics, it is not only governments which understandably lean on the statistics which they regard as being more central to their case, put it that way. But I think the statistics, the figures that we have given on sewage and the costs of dealing with environmental pollution are accurate. I understand that there are concerns about, not necessarily this year's increase, but the increases which people see in future years if we are to fully recover the cost of the strategic plan within a reasonable time. I understand the concerns about that and I am sure those concerns will be expressed very vigorously to us during the course of the consultations that we will be having with the Legislative Council. But if one votes for the "polluter pays" principle, if one votes for the establishment of a Sewage Services Trading Fund, the objective of which is by and large to, if it is not an inappropriate expression in the circumstances, wash its own face financially within a given period of time, then one somehow has to make the figures add up. Those are the statistics which are really awkward in these circumstances, but those are the statistics that we are all left with at the end of the day.

PRESIDENT: Mr CHOY Kan-pui.

MR CHOY KAN-PUI (in Cantonese): Mr President, since the implementation of the Sewage Services Ordinance last year, the restaurant and catering services operators have been complaining that both the tests conducted by the Government as well as the sewage strength standards are open to dispute, and that various trades have been paying excessive sewage charges. As shown in the results of the appeals lodged by the proprietors in various trades, the rate of success of such appeals is very high, thus reflecting clearly that the sewage load target determined by the Government for the various trades has been set at too high a level. Will the Governor inform this Council whether the Government has considered re-determining the sewage strength standards as well as the charges on the sewage load for various trades so as to reflect the actual situation fairly and reasonably? Also, the Government has recently planned that the sewage charges are to be increased substantially in three years' time so as to enable the Sewage Services Trading Fund (SSTF) to become financially independent after that 3 years. Just why must the Government require the SSTF to achieve a balanced budget within 3 years instead of having the period extended to 10 years? In the latter case, the sewage charges could increase gradually over 10 years instead of increasing abruptly within three years.

GOVERNOR: On the first question, I do not think I can add very much to what I said earlier. We have undertaken, indeed we undertook some time ago, to review the TES. I hope that as a result of that review, the number of people feeling obliged to appeal for variations of their TES rate will fall. The Secretary, I think, answered a question on this subject yesterday, giving all the latest figures. But clearly, the more confidence there is in the basis for the TES, the fewer people, I guess, will in due course apply for a variation in the charge on them.

Secondly, the Honourable gentleman asks about the period by which the Sewage Services Trading Fund should be covering its full costs. Let me say, first of all, that covering full costs is, in the case of the Sewage Services Trading Fund, a slight misnomer. We are not requiring the Fund, as would be the case in other circumstances, to cope with depreciation. We are not requiring it to show a return on capital investment, and indeed the Fund itself is not covering capital spending; that is being dealt with through the normal public sector programme and that makes it different from, I think, most other trading funds or from the principle of trading funds. In addition, the surplus made in the last year is being rolled over into this year in order to abate the charges that would otherwise be required. So we have limited the application of trading fund principles in order to try to reduce the overall costs.

We are proposing not a three-year period to cover costs, but a four-year period. If there is pressure to extend the period beyond that, then obviously the consequence will be, rather higher charges than might have been necessary later on and to some extent, later charge-payers subsidizing earlier bills. But it may be that there are those who would think that was a fairer way of doing things. Clearly, judging by the enthusiasm with which these proposals have been greeted by the Council and others, we are going to find ourselves in quite a lengthy discussion about this. But I think all of us are looking for a sensible solution which enables us to clean up the environment without departing from the "polluter pays" principle, or on the other hand, without loading excessive charges on the customer.

PRESIDENT: Mr CHOY Kan-pui, do you wish to follow up?

MR CHOY KAN-PUI: No, I do not wish to.

PRESIDENT: Mrs Miriam LAU.

MRS MIRAIM LAU (in Cantonese): Mr President, according to the annual report of the Environmental Protection Department for the year 1996, water quality of Hong Kong's beaches have been deteriorating over the past five years; of the 56 beaches in Hong Kong, 10 were rated from poor to very poor in water quality five years ago, but the number has risen to 19 last year. The Government has in fact been implementing water quality control for over 10 years and a lot of the taxpayers' money has been spent. Starting from last year, the public have to pay sewage charges, the amount of which would be increased substantially in the future. However, we do not see any improvement as far as water quality is concerned. Under these circumstances, will the Governor inform us how the Government is going to convince the general public that this expensive sewage disposal strategy is both effective and does worth the money?

GOVERNOR: I think as the honourable lady knows, we have only been trying to put this sewage strategy into place since 1992-93 and we have invested a considerable amount of cash in it. The objective is that by 1997, we should have reduced the pollution load in Victoria Harbour by about 70%, and that we should have reduced the pollution elsewhere, for example, off some of the beaches in the south of the Island, significantly as well as a result of bringing the scheme on-stream. So I think at the moment that the most we could say is that we have stopped the problem getting worse and that we will see the real benefits when we have the opening of the treatment facilities on Stonecutters. We will see the real benefits with a reduction of about 70% in pollution in 1997.

I do not think that people who are concerned about charges think that we are marking time in trying to introduce this important scheme. I think their greater concern is the level of the charge which they are not necessarily paying now but think they will be paying in the future. But I can assure the honourable lady that we will get on with the scheme as rapidly as we can. I have visited the construction site on Stonecutters ─ we would warmly welcome honourable Members visiting it if they would like, it is a very remarkable piece of civil engineering.

MRS MIRIAM LAU (in Cantonese): Mr President, I would like to raise a very short supplementary. Apart from the objective to have the pollution load in Victoria Harbour reduced by 70% by 1997 as referred to by the Governor just now, has the Government also set down any other target, for example, has any plan been set to improve the 19 beaches which are not usable now with an aim to gradually opening them for public use within a certain number of years in the future, so that the public can enjoy the sun and the beaches on one hand and feel that the sewage charges they are now paying are worthwhile?

GOVERNOR: The Honourable lady is right. It is very important to be able to demonstrate to people that additional costs that they may have to bear are bringing them a cleaner environment. And as the sewage strategy becomes comprehensive, or more or less comprehensive for the territory, I am sure we will want to point out the impact on individual beaches around the territory. And then I hope that people can enjoy them in fine weather, we all hope, shark-free.

PRESIDENT: Mr Fred LI.

MR FRED LI (in Cantonese): Mr President, my question does not concern with sewage charges; as I would like to follow up with a question about the Governor's trip to the United States and Canada. Mr Governor has been in Hong Kong for a few years now, according to my observation, he always made relatively daring and "deviative" remarks whenever he visited other foreign countries. Such kind of remarks has often drawn criticisms from the Chinese officials and pro-China parties, and the recent remarks he has made even aroused concerted accusation from the business associations of Hong Kong. Could Mr Governor tell us why you feel you you have more freedom when you are elsewhere or why you would make remarks which are more "deviative" when you are elsewhere? Why are the remarks you made in Hong Kong less remarkable?

PRESIDENT: Well, I thought you were always "deviative". (Laughter)

GOVERNOR: That is what I like to hear from the President of the Legislative Council. (Laughter) I think that it is perhaps surprising, maybe even pleasing, to discover that I say things sometimes elsewhere which are exactly the same as the things I say in Hong Kong, but I get attention from them when I say them elsewhere, which I do not get when I say them in Hong Kong, invariably, even, from Hong Kong newspapers. (Laughter)

My favourite comment on my trip to the United States was the newspaper correspondent of one of the leading world newspapers reporting from Hong Kong ─ and he quoted one or two Members of the Council in his article ─ but his main point was that the controversy in Hong Kong seems to be about things I had not said which, had I said them, would not have been regarded as controversial by anyone ─ if the Honourable Member can follow that contorted logic.

The truth of the matter is that the American newspapers were rather enthusiastic about the messages I gave. I thought a question like this might come up and I came, as they say, prepared ─ prepared with some of the headlines from speeches I made in the United States:

"Hong Kong to Lobby US on China. Governor ─ Don't Use Trade Status as a Weapon" (USA Today)

and so on. I can offer several more along similar lines. I am afraid though, that as I said in my earlier remarks, the headlines that people were most concerned about, the headlines which had shaped some of the questions that I found myself answering, were the headlines which had appeared in March and April and had not, frankly, conveyed a very reassuring picture about Hong Kong. I am sure that recent American television interviews will have created a rather more reassuring impression. But I do think that people should be aware of the consequences of their actions and of the consequences of things that they say. And to borrow a phrase, a colloquial phrase: it is a bit rich to criticize those who have to deal with the consequences of those things rather than to criticize those who have said the difficult and awkward and damaging things for Hong Kong in the first place.

MR FRED LI (in Cantonese): I do not know whether Mr Governor would say things to the media of Hong Kong in the same manner in the future because what I have mentioned is only what we have observed so far, and that is, Mr Governor has made more daring remarks elsewhere. I hope Mr Governor would not tell us that the foreign media is more concerned about Hong Kong. I also hope that you would express your views frankly when you are interviewed by the media of Hong Kong.

GOVERNOR: I think that parts of the Hong Kong media, and I include in the list Ta Kung Pao and Wen Wei Po, have occasionally had reason to criticize me, but I hope they have never criticized me because I am catatonically boring. There may be other reasons for criticism, although that may be vanity on my part. And I do not seek to criticize the press. It is the last thing that one should do. "Never complain, never explain", a very wise political leader once said. I do not seek to criticize the press for the way they report me or do not report me. If you say the same thing frequently, perhaps people stop writing it down and putting it in headlines. If others find what I say more interesting when I am away from Hong Kong, or even when I am in Hong Kong, then so be it.

PRESIDENT: Mr CHIM Pui-chung.

MR CHIM PUI-CHUNG (in Cantonese): Mr President, we are all human, not saints. We often make mistakes. Mr Governor, I have praised you last time (Laughter). I can remember that when you were answering Members' questions on 18 April, you said neither the United Kingdom nor yourself would be interested in Hong Kong after 1997; however, when you were in the United States this time, you said that the United Kingdom would still be concerned about Hong Kong for 50 years after 1997. Would you take this opportunity to clarify what the United Kingdom would be concerned about for 50 years and what it would not be concerned about so as to give the public a clearer picture?

GOVERNOR: I do not recall ever saying on 28 April that after 30 June 1997, I would not be interested in Hong Kong and the United Kingdom Government would not be interested in Hong Kong. That is the opposite of the situation and I hope the Honourable gentleman will not regard that as a provocation because I am very keen that our warm relationship should continue through another year of these question sessions.

Let me say what the situation is and to express my surprise that it should ever be regarded as controversial. The Joint Declaration is a guarantee of Hong Kong's way of life for 50 years after 1997. It is a guarantee which is embodied in a treaty signed by China and signed by the United Kingdom. If you sign a treaty giving a guarantee for 50 years, that places on your shoulders a moral obligation to take an interest in that treaty operating as it was supposed to operate for 50 years. And since the treaty is all about guarantees for Hong Kong's way of life, then it follows that that must remain a matter of substantial interest to the United Kingdom during the period of the treaty. Now I am not quite sure why the New China News Agency and others regard that as a provocative observation. Nobody is suggesting that British sovereignty does not come to an end on 30 June 1997. Nobody is suggesting that because the treaty shows a continuing interest on Britain's part, that Britain is somehow trying to extend its influence in Hong Kong beyond 30 June 1997. That is not the case either. But there is, has always been, and will continue to be a strong moral obligation on the United Kingdom and all those who have been associated with the United Kingdom's policy on Hong Kong so far as Hong Kong's maintenance of its values and freedoms are concerned for 50 years beyond 1997. Now the Prime Minister reasserted that extremely clearly when he was in Hong Kong a few months ago. It has been reasserted by the main spokesman on foreign affairs of the main opposition party in the United Kingdom. It is British policy, if you like, across the board. It is a British commitment, not just a partisan commitment, and I am sure that Britain will want to live up to it and I am sure that there will be those in Hong Kong who will want to make certain themselves that Britain lives up to it.

PRESIDENT: Mr LEE Cheuk-yan.

MR LEE CHEUK-YAN (in Cantonese): Mr President, in replying to a question raised by the Honourable CHIM Pui-chung just now, Mr Governor said that the Joint Declaration guaranteed that Hong Kong's ways of life would remain unchanged for 50 years. One of the ways of life of Hong Kong citizens is to take part in the candlelight vigil at the Victoria Park on the evening of 4 June to commemorate the June 4th Incident. Next Tuesday will be the seventh anniversary of the June 4th Incident while the "Democracy Procession" will be held on the preceding Sunday. If the future Special Administrative Region Government were to ban these sort of activities by invoking laws formulated by the provisional legislature, does Mr Governor think that this will pose a considerable impact on the stability and prosperity of Hong Kong?

GOVERNOR: The practice that I have followed is to try not to answer hypothetical questions, arguing always that real life is difficult enough without imagining problems for oneself in the future. But having said that, let me offer the Honourable gentleman a couple of personal reflections on what is an important issue.

At the moment, the holding of peaceful political rallies, the holding of dignified vigils is clearly wholly within our law and our law reflects the Bill of Rights which reflects the application of the international covenants in Hong Kong. If the international covenants are to continue to apply to Hong Kong and our laws are to reflect that, then I cannot see that there should be substantial changes in the way that people go about expressing their beliefs and expressing their own value systems.

Let me say something which is related to that. I read this morning and yesterday the transcript of Director LU's remarks on an American television programme and I say straightaway, without any qualification, that reassuring remarks from Chinese officials are a lot more welcome to the community and to the international community than the opposite. But there were two or three points, and one of them is very relevant to what the honourable gentleman is saying, which caused me to have further thoughts when I read very carefully that text. First of all, if Chinese officials are keen on the development of democracy, what is wrong with the development of democracy represented by this Legislative Council today? I think that many members of the American audience as well as many members of the Hong Kong audience will puzzle a little about that. And if it is the case that democrats, or all parties, as the New China News Agency reminded us Director LU had said, can play a part in Hong Kong after 1997, when is some sort of dialogue going to begin with those who will be part, apparently, of the political debate after 1997, because sooner or later everybody knows that that dialogue will have to start?

But directly relevant to what the Honourable gentleman said is this, I noticed that Director LU said democrats and other parties could take part in elections and the electoral process within the laws of Hong Kong. Well, what laws are we talking about? The Basic Law is perfectly clear, the laws today are perfectly clear. There are no laws today which stop democrats, whether democrats just one word or the Democratic Alliance for the Betterment of Hong Kong, taking part in the electoral political life of Hong Kong.

So if we are to have the same freedoms and the same opportunities in the future, freedoms and opportunities guaranteed in the Joint Declaration that we have today, I see no reason why one should think in terms of constraints on the sort of activity which many democrats will be involved in over coming days.

MR LEE CHEUK-YAN (in Cantonese): Mr President, Mr Governor mentioned earlier in the last part of his speech that Mr LU Ping has spoken on the issue of law. Mr Governor has only said that the Joint Declaration should guarantee the maintenance of all our freedoms. However, I would like to remind Mr Governor that according to the interpretation of Mr SHEN Guo-fang, "to love the country and to love Hong Kong" together with "to support the Basic Law" is the prerequisite. In this sense, if there is no such prerequisite in the Joint Declaration but in the Basic Law, and if it provides that only those who "love the country and love Hong Kong" and "support the Basic Law" can take part in elections, would that be considered as a discrepancy between the Basic Law and the Joint Declaration?

GOVERNOR: I do not doubt the importance of an aspiration for patriotism on the part of those who seek a place in public service and in a sense, that is reflected in the sort of oaths or declarations that men and women make when they enter a parliamentary assembly or when they become a judge. But legislating precisely for degrees of patriotism, particularly if you insist on being able to define that patriotism yourself, can lead one into a situation in which one is applying to legislators and others not an objective test but a subjective test. And that, the Honourable gentleman may recall, is one of the, perhaps, principal issues on which our discussions about electoral arrangements broke down in 1993. I have never been able to see any reason against an objective test for, for example, legislators carrying through on the train beyond 1997. But a subjective test is a very different matter and I think it is difficult to reconcile a subjective test with the rule of law. Conceivably, you can accommodate a subjective test within rules and within laws, but you cannot accommodate a subjective test within the rule of law.

PRESIDENT: Mr SIN Chung-kai.

MR SIN CHUNG-KAI (in Cantonese): Mr Governor, the Honourable LEE Cheuk-yan has just asked questions about activities held on the evening of 4 June. If the Preparatory Committee makes a request to you for the reservation of Victoria Park for their celebration activities while the Hong Kong Alliance in Support of Patriotic Democratic Movements of China (ASPDMC) also makes a request to you for conducting a candlelight vigil there on the evening of 4 June 1997. How would you handle these two requests?

GOVERNOR: Well, it is an interesting hypothetical question. There is a board game which some people play at Christmas called Moral Dilemma, and I think there is a limit to the amount that I am prepared to play that game in public with the Legislative Council.

But, let me just repeat something I said earlier. So long as I am the Governor, I shall want to ensure that issues like freedom of speech and freedom of assembly are exercised within the law, a law which reflects the international covenants which apply in Hong Kong and I hope, very much, that my successor will take exactly the same point of view. I think it would be difficult to explain were my successor to take a different point of view, but that is, I think, to look a long way down the barrel to 1998.

MR SIN CHUNG-KAI (in Cantonese): Mr Governor, can you assure us that the ASPDMC can still hold a candlelight vigil at the Victoria Park on the evening of 4 June 1997?

GOVERNOR: I am not sure whether the application has yet been framed. What I can tell the Honourable gentleman, and I hope that this is not a point which anybody is likely to dispute, is that so long as I am the Governor, the law will be applied in the way I described.

Can I add one other point. When I was answering questions, I think it was either the last time or the time before, I mentioned the figures for the number of public meetings that had taken place in Happy Valley. Not outside the Royal Hong Kong Jockey Club, but outside another prestigious building, the New China News Agency Headquarters. And I mentioned the number of marches there had been to the New China News Agency Headquarters. I think the figures were 139 public meetings in two years and nine marches. And I said that in all that time, there had only been one arrest. Now it is inconceivable, I think, that you could find figures like that. In other communities, I think the number of arrests would probably have been far higher. In other words, I think it is unlikely that many other communities would have exercised their rights to assemble and their rights to march in such a peaceful and orderly way as happens in Hong Kong. In such a tranquil community, I do not think we should be too exercised about the law on assembly.

PRESIDENT: Mr David CHU.

MR DAVID CHU: Mr Governor, can you comment on your relationship with the Hong Kong business community before and after your North America trip? And also what are you planning to do in the remaining 13 months of your office to improve the relationship with, and repair the international image of, the Hong Kong business community?

GOVERNOR: Well, I think as far as repairing the image of, not the whole of the business community, but repairing that of Hong Kong is concerned, the Honourable gentleman could play a part. The Honourable gentleman was one of those members of the Preparatory Committee who was quoted, extensively, in the article which led to such excitement in other parts of the business community. I am sure if the Honourable gentleman had spoken rather differently about his enthusiasm for Hong Kong's autonomy, democracy and civil liberties, the article would have turned out a little differently. So if the Honourable gentleman will join me in speaking up for those things which have made Hong Kong such a special and decent place, I am sure that between us, we will be able to make an impact on international public opinion.

As for my relationships with the business community, I guess they are the same today as they were a month or six weeks ago. I doubt whether anybody has spoken up for the values which have made Hong Kong so economically prosperous. I doubt whether anybody has spoken up for those as much as I have or, if I may say so, got as much attention in the media for those speeches. I am at the centre, or near the centre, of quite a lively controversy in Britain and Europe because of my advocacy of some of the business philosophy and economic philosophy here in Hong Kong. And I will continue to point that out.

But let me just add a point to the Honourable gentleman. I am sure the Honourable gentleman would agree that the Wall Street Journal is a newspaper which thoroughly endorses Hong Kong's approach to economic life, which warmly endorses the successes of the business community in Hong Kong. The Wall Street Journal, not the Asian Wall Street Journal, on 15 May, had this to say in an interesting editorial, and it may well be misguided, but this is an intelligent newspaper editorializing in Hong Kong: "As the people of Hong Kong find themselves facing seemingly impossible odds in a struggle to maintain liberties they have come to enjoy, it is getting harder to believe in happy endings after China takes over in 1997". That said, they went on: "We are not ready to give up on the territory and its determined citizens". Now why are they editorializing like that? Because of a list of things which they then set out, many of which have been said or done by Chinese officials and Chinese advisors in the last two or three months, they conclude by saying that what they hope will happen is that more people will speak up for Hong Kong and speak up for Hong Kong's liberties and values. And that is something which I am sure all of us would say Amen to.

PRESIDENT: Mr CHU?

MR DAVID CHU: I do not have any follow-up question, because if I do ask one the Governor may ask me to join him on his trip on the Britannia. (Laughter)

PRESIDENT: It is a supplementary, Mr Governor. You may wish to respond to it.

GOVERNOR: Were I to take a trip on the Britannia, it would conceivably be with even more aristocratic, royal figures than the Honourable gentleman ─ a trip on the Britannia conceivably, a round-the-world cruise ─ I think perhaps the Honourable gentleman and I would both find that a bit too much.

PRESIDENT: Mr CHU might invite you to ride on one of his Harley Davidsons which will have ups and downs. (Laughter)

PRESIDENT: Miss CHAN Yuen-han.

MISS CHAN YUEN-HAN (in Cantonese): Mr President, I would like to raise a question about sewage charges. Is Mr Governor aware of the fact that certain details of publicly accepted Government policies may affect people's livelihood? For example, when the "polluter pays" principle in respect of sewage charges was discussed, the question of why it was necessary to recover sewage charges from households was raised by some people and such a query was supported by the general public at that time. Will the Government inform this Council whether it will lose sight of the interests of members of the general public when its policy is widely accepted; and whether individuals will be greatly affected as a result of wrong calculation or estimation on the Government's part? Has the Government considered these factors?

GOVERNOR: I agree with the Honourable lady that we have to be very careful about the impact of a principle like "polluter pays", which is fine in theory, on the household budgets of individual families. As the Honourable lady knows, we have tried to ensure that those in the greatest need do not pay these charges or pay much less. And I think I am right in saying that about 60% of households will only have, as a result of the proposed increases, to pay about between $1 and $2.50 per month extra, and that 16% of domestic households will still pay nothing. So that is well over three quarters who are paying a pretty limited amount.

But I do realize, not least because people have said it to me when I have gone out on district visits, that what people are concerned about, in a sense, is less the small figure for this year than the figures which they see for future years which they think are more substantial and which give them the impression that they are never going to get to the end of the road with this issue. So we have to explain to people and we have to discuss with the Honourable lady and other representatives of the community in this Council how we can stick to principles which I think the community by and large accepts, without hitting individual families too hard.

MISS CHAN YUEN-HAN (in Cantonese): Mr President, I have something to add. Last October, when the Government started to collect sewage charges, people had expressed to us their worries. The sum as calculated in last October was not as small as the "cost of a bun" which Government officials put it. It costs more than a bun. In fact, the general households are required to pay $10 to $20 more. This is already a burden for the grass-roots who have been paying around $100 or less for water charges per quarter. So, is it possible that there is an error in the Government's calculation, or that there is something wrong with the Trading Fund as a result of which the final charge was not just an additional ten cents or so as referred to by Mr Governor?

GOVERNOR: No, I do not think it is fair to say that we have got the figures wrong, because the increase for this year which has been proposed, if one also allows for inflation, is about what we were saying it would be 14 to 16 months ago. But I would just like to remind the Honourable lady that 77% of domestic households pay less than $15 of sewage charges per month. The Honourable lady may think I am wrong, but my hunch is that people are less concerned about that figure than they are about what the figure may be next year or the year after or the year after that, and it is in that area that I think we actually have to discuss with Members of the Council how to accommodate our principles to what is going to be acceptable in the community.

I do not wish to be too tough in defending these principles. I do understand what the Honourable lady is saying and I can assure the Honourable lady that the points that she has made this afternoon, the points which other Honourable Members have made, are all points that have been made to me personally on the street, in people's flats, and most recently in a Well-Woman Clinic.

PRESIDENT: Mr CHAN Wing-chan.

MR CHAN WING-CHAN (in Cantonese): I also want to raise a question on sewage charges. Mr Governor has recently convened two summit meetings on employment, both without much success. The unemployment rate recently announced by the Government is on the rise, with nearly 90 000 people being unemployed. Since the Government started to impose sewage charges and surcharges on members of the public and the catering industry last year, the catering industry has already been forced to make an urgent "SOS". Now that the Government is going to increase sewage charges and trade effluent surcharges drastically, operating costs will go up, and the catering industry will be "doomed beyond all doubt". Many restaurants have closed down as a result of the charges, thus driving more workers into unemployment. Would the Governor inform this Council whether he would consider injecting funds into the Sewage Services Trading Fund, and withdraw the proposal on increasing sewage charges and trade effluent surcharges so as to ease the burden of the people and restaurant operators? If the Governor refuses to do so, does it mean that he is totally indifferent to the people's request and plight?

GOVERNOR: I am sure that were I to propose injecting a large amount of taxpayers' money into the Sewage Services Trading Fund, some of those whom the Honourable gentleman might sometimes call political allies and friends would be accusing me of welfarism. So I would have to be pretty careful about that.

I repeat what I said earlier. We have treated this Trading Fund in a completely different way from others. We have not made it take account of net depreciation. We have not been meeting capital requirements from the Fund. We have not been insisting that the Fund should allow for a return on capital investment. We have used some of the surplus that was built up in the last year to keep charges in the coming year lower than they would otherwise have been. These are all, in a way, departures from the normal principles of running a trading fund. I find it difficult to believe that the charges that have been proposed in the TES, for example, are going to lead to the death of restaurants right across Hong Kong. And I suspect the Honourable gentleman would think that was, on reflection, a trifle hyperbolic. But, of course, any increase in charges is unwelcome to a businessman, particularly one, perhaps, running a small business, and we must do everything we can in the way we manage the services for which businessmen pay to make them as cost-effective as possible and therefore as cheap as possible to those who use their services.

MR CHAN WING-CHAN (in Cantonese): Mr Governor said the charges would not lead to the death of restaurants, but at least they are an added burden. The Governor also said we should not use taxpayers' money to pay sewage charges. My idea is that at present, members of the public are already paying sewage charges. We support environmental protection. But, since the people are finding a more difficult financial burden to bear than before, we hope that the Government can share the operating costs of sewage disposal services as a means of joining hands with the public to protect the environment. I believe everyone hopes that when the Governor returns to visit Hong Kong in the future, our harbour will look cleaner and more beautiful. I hope Mr Governor can re-consider my suggestion; that is, the Government should inject funds into the Trading Fund so that all parties can contribute to the promotion of environmental protection. That way, our harbour will look more beautiful.

PRESIDENT: Do you wish to respond to that statement?

GOVERNOR: The Legislative Council has voted not only for the "polluter pays" principle, but also for the Sewage Services Trading Fund which is the way that we apply that principle. Now I am sure I have said enough for most honourable Members today to make the point that I am not trying to apply this principle in a dogmatic way which is careless of the impact on people's livelihoods. I cannot make that much clearer than I have already.

I, too, hope that when I return frequently in the future that I will be able to see a clean harbour, but it will not be a clean harbour at no cost, somebody will have paid for it.

PRESIDENT: Is it not true that there is a rule that if you wish to come back to Hong Kong post-1997, you need to seek the permission of the future Chief Executive? (Laughter) And you might be feted by him, and by all kinds of restaurant owners.

GOVERNOR: As I have said earlier, that would be a great pity, but conceivably better for my figure.

PRESIDENT: Mr James TO.

MR JAMES TO (in Cantonese): I was out of town last Thursday when the Governor's second Summit on Drugs was held. So please do not take me wrong, I did not boycott the summit. However, eight major religious drug addiction treatment agencies did boycott it. I felt very sorry on hearing that when I came back. Recently I have talked to them and understood that they had been asking for government subvention for years. But during the past few years, as a member of the Legco Panel on Security or as a member of the Action Committee Against Narcotics, I could see that the Government has been working very slowly and in a bureaucratic way in this respect. The Government even turned a deaf ear to voices urging for some services or for improvement in the service standard. The blame should not be shouldered by any single person but by the whole system which includes the Finance Branch, the Social Welfare Department and the Narcotics Division. I hope Mr Governor would say no more that these organizations had had useful dialogue with the Security Branch in the past because this is an illusion only. Will Mr Governor further explore why these agencies could not but resort to boycotting the summit? Did they really have useful meetings with the Government and is their boycotting this time only a gesture, just as what you have said? In fact, they are not politicians and need not resort to maneuver anything as some other people do. They are the genuine front-line workers and lauded by the public for the good job they have done in providing treatment and rehabilitation works for drug abusers. I hope Mr Governor could look at this matter clearly and will not wait until the completion of the assessment in October next year before granting subvention, so that more people can gain immediate access to these services.

GOVERNOR: I think it was a pity that these organizations did not take part in what was another extremely successful summit. I have seen some of their work for myself. I have taken an interest in their work myself and I think it was a pity that they thought this was the best way of drawing attention to their arguments. We had not had a particularly good meeting with them beforehand. We had a very long meeting. I think my officials spent over three hours at a meeting with them trying to match their demands, but at last were unable to do so.

Just let me though explain to the Honourable gentleman what the position is and put it in context. First of all, we are not arguing that treatment has to be a monopoly of one or two providers. We have just announced that we will be subventing two substantial projects by Caritas and by the Hong Kong Christian Service to provide residential treatment for drug abusers and to provide a counselling service for psychotropic drug abusers. We have also been providing more assistance for the groups who decided, I think regrettably, to boycott that particular summit meeting. What are we doing? Well, we have clarified the arrangements on Comprehensive Social Security Assistance for them. After I had been to one of the centres that they run and heard from them first-hand about their difficulties in funding education for young abusers, we have now made available a block grant which, I think, in the last few months of last year cost us about just over $2 million for funding education and I think in a full year will cost about $7.5 million. We also offered them, at the meeting we held with them the other day, just over $3 million to develop their counselling services to employ more social workers, and we said beyond that, that we would like in a genuine way, in a positive way, to consider the case for subvention, but we could not do that without a proper assessment. If we were to provide subvention without assessment, I am pretty sure myself that sooner or later the Finance Committee of this Council would have a word or two to say about it. What we explained to them was that an assessment was not a way of putting off helping them, that we would carry through an assessment as rapidly as we possibly could, but that we wanted to have a proper job done. So I think the sooner we can get on with that the better. I want to see our relationship with them develop and broaden over the coming years. I think they have an extremely important part to play in the rehabilitation and treatment of drug abusers. As the Honourable gentleman will know, after an increase of about 250% in the number of young drug abusers from 1990-94, we saw last year, for the first time in a long period, an actual fall in the number of young drug abusers and in particular a 27% decline in the number of newly reported drug abusers. So we have started. It is no reason for complacency. We have started to see some slightly better figures and we have got to make the figures even better and those Christian organizations can play a very substantial role in that work and I hope will do so.

MR JAMES TO (in Cantonese): Will the Governor consider speeding up the assessment work as this matter has in fact been delayed for a long time? If we have to wait until October next year, I do not know whether I can persuade them not to boycott this assessment or even the meagre subvention that the Government would grant.

GOVERNOR: Well, I hope the Honourable gentleman will be able to persuade them to get into a helpful dialogue with us. It is in everybody's interests, not least theirs, that we work together. We are genuine in wanting to do so. But I think we are sensible to believe that there has to be a proper assessment for them as non-governmental organizations just as there would have to be for anybody else.

ADJOURNMENT AND NEXT SITTING

PRESIDENT: In accordance with Standing Orders, I now adjourn the Council until 2.30 pm on Wednesday, 5 June 1996.